Although women generally outlive their spouses, it’s still common in this day and age for husbands to handle long-term financial planning with little or no involvement from their wives. Once widowed, women often find that financial advisers who did business with their husbands fail to address their concerns. In fact, 70 percent of widows considered firing their advisers within three years of their husbands’ deaths, according to research by Minneapolis-based Allianz Life Insurance Co.
“Advisers often aren’t as responsive as they should be, they talk down to widows, or they take the ‘Don’t bother your pretty little head’ approach and fail to explain things,” says Washington, D.C.-based financial planner Alexandra Armstrong, co-author of “On Your Own: A Widow’s Passage to Emotional and Financial Well-Being” (Armstrong Fleming & Moore Inc., 2006). Some women cede control not only because they’re overwhelmed by the estate-settling and grieving processes but also because they doubt their abilities when it comes to “high finance,” says behavioral psychologist Matt Wallaert, the lead scientist at Thrive, a New York-based financial management Web site (JustThrive.com).
Women routinely handle day-to-day household finances such as paying bills and managing bank accounts, Wallaert adds, but due to lack of exposure they tend to underestimate their investment management capabilities. When put to the test, though, women usually know more about investing than they think they do.
The basics of financial planning can be learned. Meanwhile, newly widowed women should make it clear they intend to retain control over their investments, that they’ll make adjustments in their own time and that they won’t tolerate strong-arm tactics or dismissive treatment. However, Armstrong advises against making immediate changes. Unless an adviser’s dealings seem shady, in the beginning it is easiest to work with that person because he or she is already familiar with the couple’s situation. This also applies to lawyers and accountants, Armstrong says. “In six months to a year, you can reassess these relationships,” she says.
A widow’s first order of business when working with an adviser is calculating how much it will cost her to live. The adviser should provide her with a list of records she needs to assemble. She might want to take someone with her who’ll ask questions that don’t occur to her. Before inviting a family member, she should consider whether that person’s interests might be self-serving. She should take notes and ask that any recommendations be put in writing. “It’s a difficult time. Things go in one ear and out the other,” Armstrong says.
A widow also should find out whether the adviser has an assistant who can answer basic questions. That way, she’s less likely to feel like a burden or like she’s being ignored in the event the adviser is busy with other clients.
Initially, the goal is to make sure the widow has sufficient income to pay her current expenses. “Very rarely is there a situation where something immediate needs to be done with the investment portfolio,” Wallaert says. So if an adviser presses, a widow might want to hire a replacement once the estate is settled.
Often, “adult children kind of swoop in and take over,” Armstrong says. “Don’t succumb to any undue pressure from anyone, including family.” If a widow ultimately decides to hire a new financial planner, she should ask other trusted advisers (accountant, lawyer, banker) for recommendations, as well as her widowed friends. An adviser should offer an initial consultation for free. Wallaert recommends asking whether the adviser is incentivized to steer clients toward certain investments and to regard such a setup as a potential red flag. Armstrong recommends asking whether the adviser belongs to an Estate Planning Council. Many competent advisers don’t, she says. But membership is a good indication the adviser is interested in working with widows.
[From “What a widow needs to know, The death of a husband launches many women into uncharted territory: financial planning” by Dawn Klingensmith, © CTW Features, published in the financial edition of the Bellevue Reporter, October 21, 2011]
CHECKLIST FOR NEW WIDOWS AND WIDOWERS
- Get multiple, certified copies of the death certificate
- Find the will and any trusts
- Find any life insurance, including company insurance, and put in a claim immediately
- Inventory the safety deposit box
- If you’re covered under your spouse’s company health insurance, find out immediately about keeping the policy
- Find the rest of the assets (including deeds, securities, bank accounts, retirement accounts, stock options) and liabilities (including mortgages and debts)
- Pay all bills on time if they relate to your personal life
- Claim any benefits you’re entitled to (Social Security, veterans, and professional organization benefits)
- Call your spouse’s employer to see how much money is due, and follow up with a letter
[Source: “Making the Most of Your Money” by Jane Bryant Quinn (Simon & Schuster, 2010)]
Click here to read the New York Times article For the Recently Widowed, Some Big Financial Pitfalls to Avoid